Central Bank to monitor banks’ use of mortgage arrears code of conduct

The Central Bank are going to be closely monitoring how the new code of conduct on mortgage arrears is used by banks and expect to see a significant increase in restructuring within weeks.

Addressing the Irish Bankers Federation, Central Bank director of consumer protection Bernard Sheridan said that due to the worsening state of the mortgage crisis they have set targets for the number of mortgages to be restructured.

“While it is clear that lenders have put in place forbearance arrangements for many borrowers, the level of long-term restructures remains very low.

“The Central Bank is expecting a sharp increase in the number of sustainable solutions being offered in the coming weeks and months, consistent with the targets we have set. We have set targets for the main banks to deliver such restructures, which are necessary to return borrowers to a sustainable situation,” he said.

The new code has been broadly criticised as it allows the banks to remove mortgage holders trackers.

Mr Sheridan insisted that the Central Bank will be closely monitoring any attempts to strip homeowners of their trackers. He insisted that trackers may only be removed where removing a tracker and placing a homeowner in a different arrangement would allow them to keep their house.

“The new CCMA is very clear that any such arrangement must be part of a sustainable solution and is affordable for the borrower and importantly can only be offered where no existing option which retains the tracker rate is sustainable. We will be closely monitoring lenders in particular on this issue to ensure they comply with the new CCMA,” he said.

He finished his speech by urging bankers to work for their customers who were relying on their lenders to solve the mortgage crisis.

However, chief operations officer at PIBA (Professional Insurance Brokers Association) Rachel Doyle said customers had little choice but to rely on the banks. She said the Government had chosen to save bankers instead of mortgage holders.

“There is nothing ambiguous about this, the banks hold all the aces. This is a travesty for mortgage holders in difficulty.

“It is clear from the revised code that lenders are being supported at policy level with a drive back to achieve profitability with indecent haste, regardless of the consequences on mortgage holders,” Ms Doyle said.

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